GBP/CAD Exchange Rate Steady on Scepticism about Brexit Progress
UPDATE: The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate has held close to opening levels today, but remains near the best level seen in three weeks.
The Pound rose sharply on Wednesday when EU Chief Brexit Negotiator Michel Barnier suggested that the UK could leave the EU with a bespoke Brexit deal.
Since then, GBP trader enthusiasm has diminished slightly because RBC economists have warned that there could be much more work ahead before any clear progress:
‘Even if there is a deal struck between the EU and the UK, an even tougher hurdle will be to get any deal through the UK House of Commons,’ they stated.
GBP/CAD Exchange Rate Rises Sharply on Hopes for Good Brexit Deal
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate has risen by 0.9% today, following highly supportive remarks from EU Chief Brexit Negotiator Michel Barnier.
Mr Barnier has offered the UK ‘a partnership such as there never has been with any other third country’ as it leaves the EU.
The exact details of Mr Barnier’s proposal are not yet known, but this statement has boosted Pound demand as it signifies a desire to ensure a ‘better’ Brexit deal.
Hopes for Brexit Reassurance Trigger 0.3% GBP/CAD Exchange Rate Rise
The Pound (GBP) has steadily risen against the Canadian Dollar (CAD) today, coming in at the interbank exchange rate at CA$1.66.
This appreciation has mainly been caused by cautious optimism about this afternoon’s speech from Brexit Secretary Dominic Raab.
Mr Raab will be speaking early in the afternoon and could restore GBP trader confidence if he offers reassurances about the effects of a no-deal Brexit.
Worries about whether the UK will face this ‘worst case scenario’ have been dominating GBP/CAD movement over recent weeks and some relief is sorely needed.
Canadian Dollar to Pound (CAD/GBP) Exchange Rate Dips on Future Trading Fears
The Canadian Dollar (CAD) has fallen back against the Pound (GBP) today, shedding some of Tuesday’s CAD/GBP exchange rate gains.
The shift has been caused by growing concerns about the future of Canadian trade deals, particularly concerning the US and Mexico.
For context, all three nations are part of the North American Free Trade Agreement (NAFTA), but the trade deal is currently being renegotiated at the instigation of the US.
Mexico has reportedly agreed to revised terms, but Canada still has yet to sign up to a reworked NAFTA agreement.
Today’s CAD losses stem from fears that the US and Mexico could press ahead with a bilateral trade deal, leaving Canada out in the cold.
US President Donald Trump has recently taken issue with the Canadian dairy industry and Canadian vehicle imports into the US, so an exclusion attempt isn’t out of the question.
It is still unclear whether the US will try to cut Canada out of any future North America trade agreement, but the mere possibility of such an outcome has rattled CAD traders today.
GBP/CAD Forecast: Risk of Pound Sterling Losses on Strong Canadian GDP Data
As mentioned above, the Pound (GBP) might rise further against the Canadian Dollar (CAD) this afternoon if Brexit Secretary Dominic Raab offers reassurances about leaving the EU.
For the rest of the week, Pound Sterling/Canadian Dollar exchange rate movement may be caused by Canadian GBP data on Thursday and a UK confidence reading on Friday.
Taking these in order, the Canadian Dollar could bounce back against the Pound and rise in the CAD/GBP exchange rate if higher GDP growth is reported.
The Q2 2018 readings are expected to show a faster pace of quarter-on-quarter and year-on-year Canadian GDP growth, which might cause Canadian Dollar gains.
On the other hand, Friday’s GfK UK consumer confidence reading could trigger Pound Sterling losses if it shows a forecast-matching negative reading.
If there are no clear signs that UK consumer confidence levels are likely to improve in the future, the Pound could fall against the potentially stronger Canadian Dollar.
Beyond these scheduled data releases, Sterling could also be affected by any more updates on the Brexit process.
Tensions are high among currency traders and if there are any more signs that a no-deal Brexit could be forthcoming then the Pound could be devalued.